ECB holds interest rate at 1pc low

The European Central Bank (ECB) kept interest rates at a record low of one per cent yesterday and reaffirmed its view that the eurozone’s economic recovery would be modest and uneven this year.

All 86 economists in a recent Reuters poll had expected the ECB to keep rates unchanged this month and only two had seen any change before the middle of the year.

“Euro area economic activity continued to expand around the turn of the year. Looking ahead, the Governing Council expects the euro area economy to grow at a moderate pace in 2010,” European Central Bank President Jean-Claude Trichet told a news conference. “The recovery is likely to be uneven and the outlook subject to uncertainty,” he said.

Economists expect the eurozone economy to grow 1.2 per cent this year and 1.6 per cent next year, following an expected contraction of 3.9 per cent in 2009.

Analysts are already looking to the ECB’s March meeting for any hints of further unwinding of its crisis support measures.